Mediclinic double upgraded to 'buy' by Jefferies on UAE potential

Shares in global hospital manager Mediclinic International gained more than 4% on Thursday after the company was upgraded to ‘buy’ from ‘underperform’ by analysts at Jefferies.

The double upgrade was accompanied by an increase to its 12-month target price to 616p, having previously been 550p.

Following a review of the company, the research note from Jefferies cited growth opportunities in the United Arab Emirates as the primary reason for the upgrade.

The analysts noted that the Middle East was in "investing mode" and that Mediclinic should benefit from such a trend.

"The ramp-up of new facilities should have a leverage effect on profits and growth and we expect underlying improvements," Jefferies said.

Mediclinic had recently attempted a purchase of rival Spire Healthcare, but was turned down, and so far has not followed up its interest with another offer.

Jefferies added that key to Mediclinic fulfilling its potential value was an improving ROIC (Return on Invested Capital) profile.

"We anticipate an improving ROIC profile which we believe the market is yet to give credit for; hence see a buying opportunity despite near-term market concerns on financial performance."

As of 14:44 GMT, Mediclinic shares were up 3.61% to 559.50p, making it the most profitable stock in the FTSE 100 on Thursday.